Question 4
25 pts
Sri Lanka is facing a major foreign payments crisis brought on by excessive borrowing. The value of
its currency, the Sri Lankan Rupee, in terms of dollars fell by 50% in early March, 2022 and has yet
to recover. This has limited Sri Lanka's ability to import energy, medicine and other essentials
leading to a deep recession.
Sri Lanka might borrow from the International Monetary Fund to finance imports essential for a recovery
The government can force wages downward to attract more foreign investment
The central bank can lower the interest rate to encourage investment
Increase import tariffs in order to reduce imports